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The Wal-Mart effect Comes to Healthcare

Abby Coleman 08/26/2012

Investor’s Business Daily

August 27, 2012

The Wal-Mart Effect Comes To Health Care

Health Care: Giant discounter Wal-Mart says it will soon offer vaccinations for a wide variety of ailments. Can the “Wal-Mart Effect,” which has helped slash U.S. inflation, do the same thing for soaring health care costs?

Everyone knows Wal-Mart has been a positive influence on inflation. A few years back, the highly respected National Bureau of Economic Research even estimated that the government’s consumer inflation data were overstated by about 15%, due largely to the unrecognized impact of Wal-Mart’s everyday low prices on the economy.

A separate 2007 study by the investment advisory and forecasting firm Global Insight estimated that in 2006, Wal-Mart’s low prices saved consumers roughly $287 billion — or about $2,501 per household. The impact — especially on low-income consumers — has been enormous.

John Tierney, a New York Times columnist, even suggested that Wal-Mart receive a Nobel prize for helping to pull so many people out of poverty.

Well, the retail giant may be at it again —this time in health care. As reported last week, it’s expanding customer offerings into vaccines. That’s right, vaccines.

The Benton, Ark.-based company has been moving into health care since 2006, when it started selling generic drugs at a flat $4 fee. Now, in addition to the low-cost vaccines for influenza and pneumonia it offers at 2,700 stores, it’s expanding into 10 other common vaccines, including shingles, meningitis, hepatitis and the human papillomavirus. This will give millions of Wal-Mart customers who never see a doctor the chance to get cheap preventive care.

Quietly, Wal-Mart’s changing the face of health care. Last year, it played down the leak of a 14-page internal document that outlined its plans to “build a national, integrated, low-cost primary health care platform.”

But the fact is, Wal-Mart is rapidly expanding its presence as a primary health care provider, and it’s not alone. Other retailers are getting into the act, opening clinics and providing health services at low cost.

Is it having any impact? Retail prescription drug outlays rose just 1.2% in 2010, down from increases of 14% a year just a few years ago. And as the chart shows, health care spending increases have slowed sharply in recent years — partly due to Wal-Mart.

Once again, markets respond to problems — while government creates more. If we’re lucky, Wal-Mart and other retailers may even help sink that other failed health care model, ObamaCare.

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